Skimpy Dividends Blamed for Slump in West Africa Stock IndexBy
Abidjan’s BRVM gauge heading for its worst year since 2009
Prices were too high for payouts on offer: Bloomfield’s Koua
After six years of gains, investors in a stock exchange covering companies in West Africa nations are facing a second consecutive annual decline. Disappointing dividends may be keeping investors at bay.
The Bourse Regionale des Valeurs Mobilieres, or BRVM, based in the Ivory Coast commercial capital of Abidjan and featuring stocks from seven Francophone countries as well as Guinea-Bissau, has dropped 23 percent this year. The benchmark is poised for its worst performance since 2009. Claude Koua, chief economist at Abidjan-based Bloomfield Investment Corp., says investors became frustrated with low payouts.
“If you compare the dividends that were distributed and the share prices, there was a clear phase shift,” Koua said. “So the stocks have started to fall. Some companies have recorded poor performances, but even some of those that had good performances didn’t give high dividends.”
The number of investors looking to reduce their holdings increased in the second half of the year, Koua said. “As everyone tries to exit, the prices have fallen even more.”
Sonatel, Senegal’s largest telecoms company and the biggest stock on the index, has dropped 11 percent this year. Ecobank Transnational Inc., the second-weightiest, has tumbled 28 percent. Third-ranking Societe Generale de Banques en Cote d’Ivoire, a unit of Societe Generale SA, has fallen 21 percent. Those declines have helped make the BRVM the worst-performer among African stock exchanges tracked by Bloomberg.